Obama Socialist Comments

Paul Volcker sounded off on critics of President Obama in an interview with CBS's Anthony Mason.

Asked whether he agrees with accusations that the president is waging class warfare by pushing for Wall Street reforms and higher taxes for the rich, Volcker said, "I don't understand the depth of that feeling. I really don't. This business that he's a great socialist and out to undermine the free enterprise system and so forth, I just think it has no connection with reality."

He balked at the notion that Obama could have taken office without going after the banks.

"How could you have a President of the United States taking office in the midst of a financial crisis and a deep recession and not be critical of the financial system? He would have been deaf, dumb and blind," he said.

Volcker, former Chairman of the Federal Reserve and Obama adviser, is the namesake for "the Volcker Rule," a major provision in the Wall Street reforms that could take effect as early as this July.

Though Obama has been critical of Wall Street, a survey from the end of last year found that he had approved fewer regulations than President Bush had at the same point in his presidency.

As HuffPost's Jen Bendery reports, Wall Street executives actually thrive under President Obama. Still, most major Wall Street donations are heading to Mitt Romney, who is perceived as much friendlier to banks.

Former Chairman of the Federal Reserve Paul Volcker. (CBS)
Paul Volcker was the Chairman of the Federal Reserve Board from 1979 to 1987, and he's been an advisor to President Obama. With America's economy still unsettled, Chairman Volcker sat down just a few days ago with Anthony Mason for a Q&A:

In his office in New York's Rockefeller Center, Paul Volcker fills the hallway. He is a towering figure, both in height (he is 6'8") and in reputation. He spent eight years as Chairman of the Federal Reserve.

And these days he is casting a giant shadow over Wall Street.

He says he believes the culture on Wall Street has to change.

In the aftermath of the financial crisis, Volcker has led an outspoken campaign to curb greed and speculation. His concern, he says, is for the health of the banking system.

For nearly two years, the 84-year-old economist chaired President Obama's Economic Recovery Advisory Board, helping to shape the president's banking reforms.

In January 2010, Mr. Obama urged Congress to enact "a simple and common sense reform, which we're calling the Volcker Rule, after this tall guy behind me."

The draft of the president's speech had not included Volcker's name.

"I was absolutely surprised," Volcker said. "I knew nothing about it until the words came out of his mouth."

"How do you feel about having your name on part of this?" Mason asked.

"It's partly fun, partly an annoyance," he said.

The "Volcker Rule," which goes into effect in July, will prevent banks from making speculative bets that could put both themselves and taxpayers at risk.

"I think part of the problem is that that kind of mentality, trading mentality with very high incomes, distorted the culture of traditional banking," Volcker said. "It got out of hand."

He believes soaring salaries and bonuses encouraged bankers to make more risky trades.

"Do you think that's changing?" Mason asked.

"Changing, but not very rapidly," Volcker said. "There's a lot of resistance, for obvious reasons."

Volcker knows about resistance. When he headed the Fed during the Carter and Reagan presidencies, Volcker pushed interest rates above 20 percent to conquer inflation. He succeeded, but he had to take the country into recession to do it.

Paul Volcker is a democrat. What do you think he would say? Though Ron Paul seems to think highly of him (at least in light of being the head of the Fed). Wonder why?

"It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.’ The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy."

Volcker is certainly no liberal. He was appointed to the Fed in the last year of President Jimmy Carter’s term — but with a visible lack of enthusiasm. Carter insiders called him the “the candidate of Wall Street.” Double-digit jumps in consumer prices were destroying financial markets, and Volcker was the sheriff whose job was to restore order.
Volcker’s brand of conservatism, however, is far different from the quasi-religious, free-markets ideology espoused by the former Fed Chairman Alan Greenspan and the recent crop of Wall Street barons. Though Volcker had refrained for two decades from criticizing the policies of his successors, he unleashed a blistering, and wide-ranging, criticism in an April speech at the Economics Club of New York.